Why the Click Is the Wrong Metric for Online Ads

Mere Mouse Move Can't Measure Influence; That's Good News for Publishers

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NEW YORK (AdAge.com) -- The great paradox of the web is that it's an interactive medium and everything can be measured. And that's wonderful -- unless you're measuring the wrong thing.

In the past several months, there has been increasing evidence that the most easily measured metric on the web, the click, is not the right metric to use for many advertisers. And that's good news for publishers struggling to monetize their content with online ads.

Fixing online ads
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Simply put, many advertisers in the past gave most of the credit for a sale or conversion -- which in the web world could include anything from visiting a website to printing an online coupon -- to the last ad clicked on or seen by a consumer. But that means brand-focused sites such as NYTimes.com and MarthaStewart.com and even social-media sites such as Facebook and MySpace lose credit because they are often not where a consumer will see that last ad. And when they lose credit, they lose advertisers, and when they lose ad revenue, well, you've read that story.

"Publishers have a lot to gain," said Steve Kerho, VP-analytics, media and marketing optimization at Organic. Mr. Kerho has been doing lots of analysis on how online-display ads affect search and conversions and found that in some cases, a display ad can increase a search ad's click-through rate 25% to 30%. If he had simply measured the clicks from search, he would have missed the display ads' influence.

The evolution toward better attribution models has been occurring over the past several years. Yet by some informal estimates, as many as half of all online advertisers are still measuring using rudimentary models, such as the click, which is hurting publishers.

Circular problem
John Squire, chief strategy officer of web-analytics firm Coremetrics, which today is launching a service that helps marketers give proper credit to their many online ads, likens it to an offline example: You're headed to the supermarket and on your way in you see the big sign in the window advertising ground round for $3.99 a pound. You need some anyway, so you buy it. In the online world, which measures the last ad seen, that sign alone would be given credit for your purchases in the store. But it's quite likely that you were going shopping in the first place because you saw something in the weekend circular that you wanted to buy or maybe you heard a radio ad. Under the last-ad-attribution model, the circular is worth, at worst, nothing, and at best far less than the ad for ground chuck in the storefront.

"[Online advertising] is not, by any stretch, always direct-response advertising," said ComScore CEO Gian Fulgoni, whose report, "Wither the Click," has been making the rounds in the marketing industry since he introduced it in December at a Wharton Business School conference. "In the offline world, media analysts don't think of an immediate reaction to TV or print ad."

The ComScore research, which studied 139 online ad campaigns by marrying data from its panel of U.S. internet users with shopper data, found online ads, even when they didn't result in a click, increased a consumer's likelihood of making a purchase at an advertiser's retail store by 17% and increased visits to a marketer's website by an average of 40%.

Microsoft's Atlas has been touting an alternative to last-ad accounting for the past year and research it's introducing today found that in the final two days before a sale or conversion, consumers see an average of five and a half ads. In the 90 days leading up to a sale consumers see 18 ads for a product.

"Virtually any seller that's not a search engine or affiliate [network] is not getting the proper credit for their ads," said Esco Strong, market research manager at the Atlas Institute. "There's a disconnect in terms of the actual work that's delivering people through that [sales] funnel and the sale and there's a disconnect in how advertisers are measuring their ads and planning their campaigns."

Analytics, optimization
Randy Rothenberg, the CEO of the Interactive Advertising Bureau, calls it "blunt-force mass buying combined with direct-response measurement metrics."

One solution for publishers? Organic's Mr. Kerho suggests they embrace analytics to help clients figure out how much to put in each bucket.

"Come to the table with solutions to reach the right audience with the right solution at the right time," he said. "There isn't a client we sit down with that isn't about analytics and optimization."

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